Alexander & Baldwin Inc. doubles profit amid improving economy

Hawaii’s second-largest retail property owner doubled its profit in the third quarter amid a recovering local economy that has strained finances of many landlords and tenants.

Honolulu-based Alexander & Baldwin Inc. on Thursday reported earning $6.5 million in the July-September period, up from $3.2 million in the same quarter of 2020.

Most of the gain was due to improved rental income from tenants in A&B’s portfolio of retail real estate largely comprising grocery- anchored community shopping centers, partly offset by weaker results from land development and a road materials and construction subsidiary.

“Our commercial real estate business posted excellent results in the third quarter, building on the strong recovery experienced in the first half of the year,” Chris Benjamin, A&B president and CEO, said in a statement. “With the recent Delta variant surge seemingly curbed, and with restrictions carefully being relaxed, we maintain a high degree of optimism for the future.”

A&B said tenant occupancy in its portfolio was 94.6% at the end of September, up from 93.5% a year earlier and 94% at the end of June.

Most of Kailua’s commercial core and 22 shopping centers around the state make up much of A&B’s retail real estate holdings.

Individual properties include Kaneohe Bay Shopping Center, Aikahi Park Shopping Center, Pearl Highlands Center, Manoa Marketplace, Waianae Mall, Kunia Shopping Center, Waipio Shopping Center, Laulani Village, Kahului Shopping Center, Pu‘u­nene Shopping Center and Queens’ MarketPlace.

In all, A&B owns about 4 million square feet of retail, industrial and office space statewide.

Operating profit from A&B’s property portfolio generating rent from tenants totaled $19 million in the third quarter, up from $11 million a year earlier.

A&B said it is finishing up an $18 million renovation of Aikahi Park Shopping Center in Kailua, and recently began an $8 million renovation for Manoa Marketplace.

The company also said it bought a warehouse and industrial yard in Kalihi Kai after Sept. 30 as part of an initiative announced in July to expand its Hawaii real estate holdings.

In addition to A&B’s core property leasing business, the company is engaged in land development that includes industrial parcels on Maui and a joint-venture resort housing project on Kauai called Kukui‘ula. A&B also owns road paving and rock quarry company Grace Pacific.

A&B said operating profit for its land operations totaled $1.7 million in the third quarter, down from $3.1 million a year earlier.

Results in this business segment during the recent quarter were mainly from selling 11 units and a bulk parcel at Kukui‘ula that A&B said represented strong demand from buyers.

A&B’s Grace subsidiary produced a $300,000 operating loss, which compared with a $1.6 million operating profit a year earlier.

Shares of A&B stock closed Thursday at $25.45 before the earnings announcement. Shares over the prior 52 weeks have closed between $12.96 on Nov. 6 and $25.57 Wednesday.

THIRD-QUARTER NET

$6.5 million

YEAR-EARLIER NET

$3.2 million